U.S., Altria appeal tobacco ruling to high court

WASHINGTON (Reuters) - The government and the nation's biggest cigarette maker separately asked the U.S. Supreme Court on Friday to review a racketeering verdict against major cigarette makers that was upheld by an appeals court last year.

Altria Group Inc's Philip Morris USA unit wants to overturn the verdict, while the government argues the appeals court wrongly denied the disgorgement of billions of dollars in ill-gotten gains by the tobacco industry.

In May, a three-judge panel of the U.S. Court of Appeals for the District of Columbia affirmed a trial judge's verdict against the cigarette makers, finding they violated federal anti-racketeering laws by conspiring to lie about the dangers of smoking.

The case was filed in 1999 by the Clinton administration, which sought $289 billion in damages. During the original trial, which began in 2004, the Justice Department under the Bush administration scaled back its demands to $14 billion for anti-smoking campaigns.

Besides Altria, the companies sued by the government included the R.J. Reynolds Tobacco unit of Reynolds American Inc, Lorillard Inc, Vector Group Ltd's Liggett Group, British American Tobacco Plc and its Brown & Williamson unit and two now defunct industry groups: the Council for Tobacco Research and the Tobacco Institute.

U.S. District Judge Gladys Kessler ultimately ruled that the companies broke the law and could no longer use expressions such as "low tar" or "light" in their cigarette marketing. But she said she did not have the authority to force them to fund a smoking cessation program.

The appeals court ruled that Kessler was limited to "forward-looking" remedies aimed at future racketeering violations and was precluded from imposing smoking-cessation and public-education remedies.

The Supreme Court still has to decide whether to accept the appeals, a process that could take months.

EVISCERATED RELIEF

In its petition to the Supreme Court, the government argued that the appeals court had "eviscerated the relief available" in the biggest civil racketeering case ever brought by the United States.

The ruling "thwarted" the trial court's efforts to craft appropriate relief "to remedy the ongoing effects of fifty years of unlawful racketeering activity - unlawful acts that have harmed and continue to harm the lives and health of many millions of Americans," the government stated.

Philip Morris argued in its petition that the government had improperly invoked the racketeering statute and that the appeals court was overly deferential to Kessler.

Because the case raised free speech issues, Philip Morris argued, the appeals court was obliged to make an independent examination of the record.

A judge or jury "should not have the virtually unreviewable authority to make factual findings that deny a defendant its fundamental First Amendment freedoms," the company said in its petition.

Philip Morris also argued that the appeals court erred when it found that a group of corporations could form a racketeering "enterprise" - a notion it said conflicted with the language of the Racketeer Influenced and Corrupt Organizations Act.

The appeals court found that Philip Morris and its co-defendants had formed such an enterprise by informally associating, coordinating research and conducting marketing activities with one another.

The Supreme Court still has to decide whether to accept the appeals, a process that could take months.

The cases before the Supreme Court are Philip Morris USA (f/k/a Philip Morris Inc) v. United States of America and United States of America v. Philp Morris USA Inc et al.